British officials have allowed the export to Iran of a cargo of radioactive material that experts believe could be used in a nuclear weapons programme, The Observer can reveal.

The disclosure has prompted calls for an inquiry into how the international trade in such compounds is controlled.

On 31 August a truck carrying 1,000kg of zirconium silicate supplied by a British firm was stopped by Bulgarian customs at the Turkish border on its way to Tehran, after travelling 2,400 kilometres (1,500 miles) from Britain, through Germany and Romania, without being stopped. Zirconium can be used as a component of a nuclear programme. According to one expert, it is used in nuclear reactors to stop fuel rods corroding and can also be used as part of a nuclear warhead. The metal can be extracted from zirconium silicate. It is because the compound can be used for military purposes that its trade is usually tightly controlled.

The fact that a British firm was allowed to sell the compound without scrutiny will raise questions for the British government over its controls on sensitive materials. Intelligence documents disclosed last week in the Guardian detailed how Iran is creating agencies and middlemen to procure equipment and know-how in Europe in a covert attempt to build nuclear weapons. The Iranian President, Mahmoud Ahmadinejad, is expected this week to order the resumption of tests on machinery that can be used to make weapons-grade uranium.

The official who stopped the truck was alerted after its cargo emitted unusual radioactivity levels. Bulgarian officials said that the Turkish driver was arrested on 31 August. He was investigated 'for violating international treaties... by transferring across the border dangerous wastes, toxic chemical substances, biological agents, toxics and radioactive materials'. The Bulgarians discovered the exporter was a British firm and alerted the UK embassy in Sofia, which informed London on 7 September.

There are technical rules that control the trade in zirconium silicate. These controls focus on how much of the material contains hafnium, another rare metal. The British view is that zirconium sulphate with more than 0.05 per cent of hafnium does not require a licence, as it is difficult to refine - although this is challenged by some experts. After a two-month investigation involving the British and Bulgarian authorities, it was agreed that the British cargo did not need an export licence and could be released and driven to Iran.

A Department of Trade and Industry spokeswoman said: 'The DTI informed the Bulgarian authorities that the goods as described were not controlled under UK export control (as the hafnium content of the sand was 1.1 per cent by weight) and did not therefore require an export licence... this particular case raised no WMD end-use concerns.'

However, John Large, an independent nuclear consultant, said: 'It is not a very sophisticated process to extract the zirconium from such material. Even though it appears that technically this cargo does not fall within the international controls, I would still be concerned. Zirconium is used for two purposes: one for cladding nuclear fuel rods inside a reactor and as material for a nuclear weapon. If Iran wanted this material for any illicit purposes, this would be one way it could get its hands on it.'

Labour MP Andrew Mackinlay has asked a number of parliamentary questions on the export of zirconium silicate from the UK, and wants the DTI to review its rules governing the export of the material.